EDITOR'S PAGE

Shanghai, revisited

"The Chinese, having more than once missed the opportunity to modernize, must not fail again."
— Deng Xiaoping, 1992

A second visit to Shanghai did not lessen my amazement at the city's feverish pace of economic development and modernization. If anything, people seemed as devoted as ever to Deng's admonition. Residential building projects that were in their initial construction stages a year ago on both sides of the Huangpu River had been completed or almost completed, with another set of apartments starting to sprout next door. Out the window of my hotel room just off bustling Nanjing Road, a 40-story-plus hotel complex was coming together. The sounds of hammer on pipe, metal-on-metal drills, grinding saws, and other machinery echoed from the site at all hours of the day and night.

There were significant signs of progress in the semiconductor-manufacturing realm as well. In March 2003 Grace Semiconductor was struggling to equip its fab and get silicon out the door, let alone keep pace with its Zhangjiang Hi-Tech Park neighbors at SMIC. Over the course of the past year though, the up-and-coming Shanghai-based foundry has ramped its Fab 1A 200-mm line to 10,000 wafer starts per month, with a goal of 27,000 by the end of 2004.

When I saw Grace's production line, installed equipment hummed throughout most of the SMIF-enabled fab, with any remaining floor space primed for tools to be delivered and hooked up. One of my tour guides, Qi Li (who is special assistant to Grace's president), told me that they're running at full capacity, with much of the volume devoted to quarter-micron flash chips from their partner-investor, Silicon Storage Technology. He also expressed concern about getting new tools on time to meet Grace's aggressive capacity expansion plans, noting that some suppliers' lead times have recently stretched from four to six months. Qi said that Phase 2 of the company's plan includes outfitting the Fab 1B and Fab 2 shells, reaching an eventual capacity of 43,000 300-mm equivalent wafers per month.

My personal highlights at Semicon China included the conversations I had with Chinese materials and equipment companies exhibiting at the show. Aided by the translation skills of SEMI's Wenjun Chen, I discovered the budding homegrown side of the semiconductor-manufacturing infrastructure. Many companies have years of experience as state-owned enterprises supplying local electronics, aerospace, defense, and other precision manufacturing industries, although some of those same companies have recently spun off into private entities or a mix of private and government ownership. Despite their enthusiasm, most of the Chinese supply-chain companies' technology and capabilities lag far behind their leading-edge international competitors.

Two fascinating bits of trivia came from competing high-purity quartz-tubing suppliers, Quick Gem Optoelectronic and Jingzhou Feilihua Quartz Glass. Seems the first company supplied the quartz glass for Mao Zedong's coffin, while the second's materials were used in the Shenzhou 5 manned space capsule launched successfully in October 2003. Representatives of both outfits told me that they want to increase their chipmaking market share, both domestically and internationally. Most of the companies we spoke with expressed similarly ambitious sentiments.

Partnering with foreign companies as well as maintaining ties with government organizations are recurring themes among Chinese materials and equipment suppliers. Xi Wang, managing director of Shanghai Simgui Technology, said his company spun off in July 2001 from the Shanghai Institute of Microsystem and Information Technology (SIMIT), where Xi is still a professor. Simgui, which means "new silicon" in Mandarin, produces SOI and epitaxial wafers.

Xi mentioned partnerships with Moore Technologies and Ibis, explaining how the company¡¦s ownership structure was a combination of government shares, local private investment, and equity monies from Moore. The company executive said customers use the 100-, 125-, and 150-mm substrates to manufacture chips and MEMS, and that SIMIT has research projects investigating strained SOI.

Other companies that Wenjun and I chatted with included Shenyang SIA-Yuan Advanced Semiconductor Tech (a new track system manufacturer located in northeast China) and the 45th Research Institute of CETC (an old-school, Beijing-based government-run process tool company). We also met with Beijing Jingyuntong Vacuum Equipment (purveyors of silicon crystal pullers and vacuum componentry) and Qingdao Jingcheng-Huaqi Microelectronic Equipment (a privately held furnace, heating element, and deposition system manufacturer).

Although none of them appear poised to take significant market share away from the Applieds and TELs of the world, these suppliers could be among the vanguard of an increasingly competitive, made-in-China supply-chain infrastructure.